Prof Peter Quartey calls for debt ceiling, responsible borrowing by Government
Executive Director of the Institute for Statistical, Social and Economic Research (ISSER), Professor Peter Quartey, has said the Government needs to have discussions on having a ceiling on its public debt as a ratio of gross domestic product (GDP).
According to Prof Quartey, the Government needs to decide on the level of debt cap that will be optimal for it and beyond which it will not borrow anymore.
Making the assertion during the inaugural Quarterly Economic Roundtable, Prof Quartey quipped the IMF and ECOWAS for instance have proposed for countries debt cap or threshold of 50% or 75% of GDP.
“IMF reports show that each year our debt as a ratio of GDP has been unsustainable, for the IMF the sustainable debt cap for a country is 50%, and for the ECOWAS it is 75%.
“So there has to be a discussion on where we are going to cap our debt level as a ratio of GDP whereby we choose our optimal debt level,” he quipped.
Speaking further at the Quarterly Economic Roundtable, urged the Government to borrow responsibly.
According to Prof Quartey, responsible borrowing entails the Government being able to prudently invest borrowed funds and repay them.
“We have to borrow responsibly, borrowing and being able to repay, we should also borrow to invest, we need a private sector mindset in borrowing where there are appraisal reports, evaluation reports among others,” he added.
Ghana’s debt stock pre-DDEP was more than 100% of gross domestic debt, however, following the country’s domestic and external debt restructuring, the debt stock as a ratio of GDP is projected to fall to 55% of GDP by 2028 on the back of fiscal consolidation measures outlined in the IMF’s $3bn ECF programme.
